Climate variability, climate change and agriculture

Transcription

1 Climate variability, climate change and agriculture John Quiggin Federation Fellow, Risk and Sustainable Management Group, Schools of Economics and Political Science, University of Queensland Paper presented at the 2010 NZARES Conference Tahuna Conference Centre Nelson, New Zealand. August 26-27, Copyright by author(s). Readers may make copies of this document for non-commercial purposes only, provided that this copyright notice appears on all such copies.

2 Climate variability, climate change and agriculture

3 Paper presented at New Zealand Agricultural and Resource Economics Society Conference August 2010, Nelson John Quiggin Federation Fellow Risk and Sustainable Management Group, Schools of Economics and Political Science, University of Queensland

4 Web Sites RSMG index.htm Quiggin johnquiggin Blog

5 Climate variability A perennial problem for agriculture Australia: droughts and flooding rains

6 Responses Irrigation: droughtproofing Production flexibility and diversification Financial measures for consumption smoothing

7 Responses Irrigation: droughtproofing Production flexibility and diversification Financial measures for consumption smoothing

8 Modelling State-contingent production Introduced in GE modelling, Arrow-Debreu Chambers& Quiggin, modern production theory Natural integration with finance theory

9 The Murray Darling Basin Source of most Australian agricultural production Most variable of world s major river systems High rainfall variability amplified by evapotranspiration, groundwater flows Elasticity of 3

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12 Climate Change Driven by greenhouse gas emissions Change in stochastic distribution of climate Attribution problem

13 Projections Warming of at least 2 degrees even with stabilization at 450 ppm This, and not status quo, should be baseline for comparison

14 Business as usual Implies high risk of catastrophic damage by 2100 Assumes discovery of magic bullet which will remove CO2 and/or reverse cumulative processes

15 Projections from the Garnaut Review

16 Rainfall impacts More spatial and temporal variability The wet get wetter and the dry get drier More extreme events Flood events exacerbated by sea level rise

17 Agricultural production Mixed impact for warming up to 2 degrees by 2100 Negative net impacts degrees Serious to catastrophic losses at higher rates of warming

18 Cereal price impacts of climate change (IPCC FAR)

19 Impact on Murray Darling Basin Decline in average inflows Increase in drought frequency

20 A state-contingent model Farmers plan production for Wet, Normal and Dry states Increase in drought frequency causes large reductions in profitability

21 Baseline for Murray-Darling Basin simulations

22 Median climate, business as usual, 2100

23 Median climate, 450 ppm mitigation, 2100

24 Policy implications Under business as usual, irrigation ceases to be viable Combination of mitigation, adjustment, innovation can achieve sustainable outcome

25 Concluding comments Risk and variability are central in agricultural production Climate change creates new risks, changes old ones Markets are a crucial part of the response

26 Climate variability, climate change and agriculture